By Jeffrey H. Birnbaum and Carrie Johnson
Washington Post Staff Writers
Friday, February 16, 2007
Connecticut Sen. Christopher J. Dodd has two big jobs. He is a candidate for the Democratic nomination for president, and he chairs the Senate Banking Committee.
They are proving to be a lucrative combination. Among Democrats, Dodd's $5 million campaign nest egg is surpassed only by that of Sen. Hillary Rodham Clinton (N.Y.), who has one of the most elaborate fundraising machines ever assembled.
Dodd's electoral riches can be traced to the banking panel, whose jurisdiction includes some of the wealthiest industries in America -- banking, insurance and financial services. In addition, Dodd's home state is the hedge fund and insurance capital of the country.
But it is Dodd's philosophy, not only his geography, that has made him a cash magnet. Each of these big-money interests applauds his light-handed approach to financial regulation and considers him a reliable friend -- a fact that raises questions about Dodd's viability in a Democratic field even as it bolsters his fundraising prowess.
In recent presidential polls, Dodd has been little more than an asterisk. And his closeness with Wall Street will probably not help him with the liberal-leaning Democrats who tend to vote in presidential primaries, analysts say. "It's not something you would trumpet to primary voters," said Nathan L. Gonzales of the nonpartisan Rothenberg Political Report.
At the same time, the ample donations those connections have fostered will enable him to make his name more widely known. "At this stage, the money primary is the biggest race," Gonzales added.
Financial services companies "will be making contributions to Dodd's presidential run because they can't afford to annoy him," said Melanie Sloan, executive director of Citizens for Responsibility and Ethics in Washington. "Whether or not his presidential ambitions go anywhere, he'll still be the chairman of Senate Banking Committee, and they will still need his goodwill."
Dodd, who was elected to the House in 1974 and the Senate in 1980, has never shied away from collecting funds from financial services companies. Since the midterm elections last year, Citigroup and J.P. Morgan Chase have hosted fundraisers for him, participants said. Insurance firms have held at least three fundraisers for Dodd.
Dodd collected $3 million in the last three months of 2006, outraising even Clinton. Employees of American International Group and Morgan Stanley were among the largest givers. According to the nonpartisan Center for Responsive Politics, Dodd has raised more money for his Senate campaigns from securities and investment firms than from any other industry.
During an interview last week in his stately fourth-floor office on Capitol Hill, Dodd expressed distaste with the near-constant need to generate campaign contributions to sustain a presidential bid. But, he said, the system being what it is, he is resigned to traveling the fundraising circuit for the next year or more.
He said he will not hesitate to shake Wall Street's money tree, even though he is chairman of the committee that watches over its companies. But accepting millions of dollars from industries that his committee oversees will not affect his policy decisions, Dodd said.
"My record speaks for itself," the senator said. "I haven't changed my tune. I've been, I think, fairly consistent in my views on these issues."
Financial firms have long liked what Dodd has done in the areas of legislation and regulation. "Chairman Dodd is a thoughtful leader in Congress playing an important policy role to ensure an open, competitive and sound global financial services marketplace," said Robert S. Nichols, president of the Financial Services Forum, a Washington group comprising the chief executives of 21 U.S. financial services companies, in typically flowery praise of the new chairman.
"A lot of his constituents are financial services types, and he's always been a reasonable person on those issues," added Bruce E. Thompson Jr., the head of government relations for Merrill Lynch. "Because of that, he's always gotten support from the industry."
"The financial services community would be a logical source of funding for him," agreed Edward L. Yingling, president of the American Bankers Association.
Dodd is a voice of federal restraint when it comes to financial services. He has opposed vigorous federal regulation of hedge funds, many of which are based in Connecticut. He also was the Senate's leading champion of a 1995 law that limited shareholders' right to bring class-action lawsuits against companies for alleged securities misdeeds.
Now, Dodd is leading the charge to renew terrorism-insurance legislation, which makes the federal government a major co-underwriter of insurance against terrorist attacks.
Hedge funds are "a great wealth generator" that if handled properly "will continue to be a tremendous asset," Dodd said. He added that the Banking Committee would probably not hold hearings on hedge funds this year.
"I don't want to be perceived . . . as setting up roadblocks and barriers to something I perceive to be very valuable," he said.
On the other hand, Dodd has taken some anti-industry positions. He helped write the Sarbanes-Oxley Act, which imposed stiffer penalties on accounting irregularities. He has also taken positions on a few narrow issues that anger financial firms but are popular with the populists who usually vote Democratic.
For instance, Dodd said he intends to campaign against predatory-lending practices by banks, which entail charging excessive interest rates on mortgage loans, often to low-income people. He also said he wants to crack down on excessive fees charged by credit card companies.
Dodd has leveraged his committee's jurisdiction to press for Wall Street jobs for low-income workers. In recent weeks, he has reached out to minority voters with a speech at the Rainbow/Push Coalition's Wall Street Economic Summit in New York. At the summit, convened by the Rev. Jesse L. Jackson, Dodd decried economic inequality and pledged to establish a "working group" to expand opportunities for minorities in the financial services industry.
Since assuming the Banking Committee chairmanship last month, Dodd has held hearings on predatory mortgage loans and high-interest-rate credit cards that burden consumers with unwieldy debt. He is working with Elizabeth Warren, a Harvard Law School professor and consumer bankruptcy expert, and others to roll back those high fees, he said.
"At the end of my tenure on this committee, I want it to be said that the safety and soundness of our financial institutions was not weakened on my watch," Dodd said.
Travis B. Plunkett, legislative director at the Consumer Federation of America, said the group's rating on Dodd has been a "mixed bag." But, Plunkett added, he's effective. "He often ends up on the winning side of an issue."
"We love to have him on our side, and we wince when we're going to be opposing him because he's a very effective legislator," Plunkett said.